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The WHOLESALE-MARKET gold price
slipped 0.5% from a new 8-week high in London Thursday morning, while global
stock markets stalled after a 3-day rise and commodities also edged back.
The Euro fell from $1.32 on the forex market for
the third time this week after chief finance minister Jean-Claude Juncker said new proposals for stemming the currency
zone's debt crisis – agreed at a summit on Monday – were
"largely insufficient".
The gold price in Euros touched €43,900 per kilo, a level breached only
five times during the surge to all-time record highs of summer last year.
Beijing meantime said China's full-year gold mining output in 2011 –
all of which was bought domestically, since exports are banned – hit a
record 361 tonnes, a rise of 5.9% on 2010.
China's 2011 gold imports may have reached 490 tonnes, perhaps twice the 2010
level, according to Credit Suisse.
So far in 2012, imports of Gold Bullion to India – the world's No.1
consumer – have been "significantly above average" reports
UBS strategist Edel Tully, despite last month's
doubling of import duties.
The central bank of Vietnam
said today it plans to "mobilize" private gold holdings via
"credit institutions" which would effectively replace the private
operations banned last year.
"For now, gold may well remain volatile," says Dirk Wiedmann, head of investments at Rothschild
Wealth Management, now running some €12 billion ($15.7bn) in
client funds.
"[But] it is increasingly attractive as the only truly hard currency...[Our] large positions in gold seek to preserve and grow
the real value of our clients' wealth."
"We can't put $100 trillion of credit in a system-wide mattress,"
says Bill Gross, founder and co-manager of the giant Pimco
bond-funds group. "But [savers and creditors] can move in that direction
by delevering and refusing to extend maturities and
duration."
Because interest rates cannot go down from zero, bond prices have little room
to rise, says Gross, and so "Zero-bound money may kill as opposed to
create credit.
"It may, as well, induce inflationary distortions that give a rise to
commodities and gold as store of value alternatives when there is little
value left in paper."
January's sharp rise in global stock markets, however, means that
"Strategists at the biggest banks are capitulating on their bearish
forecasts," reports Bloomberg today, citing a sharp reversal in
predictions and recommendations after last month's 7% jump in emerging-economy
equities.
"We have been increasing exposure to risk assets over the past six
weeks," says Andrew Cole, director of strategic policy for Baring Asset
Management's £9 billion multi-asset portfolios.
"We see a self-help cycle materialising" thanks to the European
Central Bank's long-term banking loans, Cole tells Investment Week after
buying £350m in Italian government bonds.
"Italy is not going to go bust and this is our way of getting exposure
to the improved liquidity."
"We believe that the 'risk off' attitude of investors which took hold in
the second-half of 2011 is largely over," agrees Angelos
Demaskos, chief investment officer of the
£35.6 million Junior Gold Fund ($56m) at Sector Investment Managers in
London to Proactive Investors earlier this week.
Anyone who "wanted to sell" junior gold mining stocks has already
sold, Demaskos believes, "and there is a very
strong possibility they will be re-rated to catch up with the underlying
commodity."
Over the last 12 months, Sector Investment's Junior Gold Fund has lost 9.0%
of its value, according to TrustNet.
The physical gold price has risen 29.7% in British Pound terms.
Silver bullion has risen 11.9% over the last year.
"It's been a good month" for US silver coin demand, says Michael
Kramer of authorized US Mint distributor Manfra, Tordella & Brookes, quoted by Kitco
News and pointing to January as the second-strongest monthly sales of silver
bullion Eagle coins on record.
Demand was "greatly" helped by the launch of new 2012 coins
however, Kramer added., because "People always
want the brand-new coins, so January sales are always pretty good."
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